business commission that also has candidates that would qualify, and the office of economic and workforce development invest in neighborhoods which does a lot of funding to these community-based organizations. and that is my presentation, and i'm available for questions. >> thank you. we have public comment? >> seeing none, commissioners? >> good afternoon, commissioners. i just wanted to thank you. >> please state your name first. >> adria baker and i am a community representative and i wanted to thank you for this opportunity to speak in support of this retail program, targeted at local business enterprises. i want to acknowledge the port

for its desire and commitment to create a san francisco water front that embraces and reflects the diversity of our city. and for staff, thoughtful approach in involving our cbos that work with small businesses to assist in the out reach for this opportunity. and to provide ongoing financial, and operational technical assistance, which will insure the success of the selected participants, thank you. >> thank you. >> any other public comment? commissioners? >> yeah, i think that it is a great idea. and it is a really nice space and you are not going to need enough of a lot of expenses to get it up and running. and i also think that the reasonably priced and the only, other concern that i would have is where we are going to

advertise in order to let all san franciscans know about it? >> our goal is to first out reach to the cbos. because we want this opportunity to be successful. and so, we are advertising through the cbos so that their client base would get the technical assistance ongoing technical assistance, so that we have a successful opportunity. >> but we could make it broader if that is your direction. >> i think that you should go both, i mean that it seems like you could say that if somebody had less experience, they should work with the cbo, but if they are qualified as an lbe and have experience, why would we force them to go through a channel that they may or may not need. it seems like, that since you have a panel that could evaluate this, they would be able to evaluate but maybe, we

are assuming that, if you go through a cbo it is because you need their help. in some way in terms of the ongoing technical assistance and there may be a qualified lbe that could apply and should be evaluated and i don't see why we would close that door. >> so we will include that and we have a network of publications that go out to small business entities and also the public newspapers and so we will include all of those in our distribution. >> and if you do the public newspapers in some of the minority communities, could you also include the ethic language, newspapers, so that they receive it in their language, that would it is not just a chronicle or the san francisco business times which only has a certain readership. >> there are quite a list of ethic newspapers in multiple languages that is within the

network. and that we out reach to. so we will make sure that we include all of them. >> yeah, and i would suggest that even renee consider putting out a press release and sending it out so that the people are aware if they are not applicants that this is, you know, we should use it and trying to create the good will in the community and the good will should know about it. >> thank you. >> i assume that the bathrooms are ada... >> yeah. this facility, was recently renovated and we had a tenant that did things that were not up to code. they went in and renovated and our project manager was wendy proctor and made sure that everything was both accessible and up to code. >> thank you. >> i just have one question, you mentioned it but, you say that the current rent at $250 a

month that is the current market that we have for that space. >> for that facility, yes. and then the base rent would increase by 3 percent annually, and so, it would be priced at the base rent of 250 a square foot, or 7 percent of gross retail sales, whichever is greater. and that is our standard for retail spaces. >> one last question. and then i will yield the floor. >> who previously occupied this space? >> he was an architect that it was not a retail space. so, there is upstairs offices in this facility, which will remain offices. and then, down stairs we decided because of its location that a retail space would be more beneficial to the neighborhood and the port. >> one last, what if a

non-profit approached us knowing what the rent was and everything? >> well, we have designated it as retail. and if they were a non-profit that had retail services, then they certainly could be considered. >> yeah, like... did you get the answer that you wanted then? >> so we are here to get your feedback and susan did not say yes or no, but the proposal that we have in front of you was for a retail opportunity for san franciscans who otherwise are priced out of participating at the port because of the intensive capitol out lay but if the intention is to broaden that, we are here to get your comments. >> i was actually going to say that i like the goal of reaching out to businesses that don't always have the necessary capital to come in and so we want to see a mix if we do out reach and include other lbes,

and in the city, i do want to make sure that we have a mix of those that are working with some of the cbos because i think that part of the goal was to expand upon the work that the cbos are doing in terms of train and providing those resources to a lot of the local businesses. and so, i think that will be helpful if we could figure out a way for the selection panel to have guidelines on having a mix at the very least so that we do reach that goal of supporting some of the businesses that are in training and don't always have these opportunities to move into our facilities. >> how do we define the lbe? >> the city has a definition of local business enterprises. and it is, you know, the size of the business, which is usually a smaller business, and it is not a chain, and... >> it is usually based on gross revenue over a three year

period with you have to be done and involved in san francisco are the two primary criteria and so we have to find out what the city what their definition is for retail. and i don't personally know it offhand, but, that is probably an area that we need to do a little more work around before we come back and make sure that we have a strong definition. >> okay. >> and then, are we doing this, and the lbe do they have to be certified? >> well, when that is your guidance. and i'm not sure that there are, or there is a list of lbe certified retail, vendors, since the city really typically, certifies lbes in the professional services space, rather than the retail space and so we have to check with the contract, monitoring division on that and we will recommend to you not certified but meet this following definition. >> you know more than i know. >> i think that we are tangling ourselves up with too narrow of a definition. >> i want to thank susan and

her staff for coming up with this opportunity, i think that it is a wonderful opportunity and i think that we have had a long issue with minorities not being able to be involved on the water front. and so i think that this is a great opportunity to give an lbe a chance to do business with the port of san francisco. because that has been a long standing issue. so, we really want to thank you for coming up with this innovative idea. and i agree with my fellow commissioners that we may need to broeden it a little bit and need to stay in the scope of why we were doing it, and i want to thank baker for being here because she has done a phenomenal job and turning great restaurant into various districts throughout the city and so i am happy to see you on the panel. but thank you susan. >> and commissioner, woo ho to

back up your question about a non-profit, the office space upstairs is still available. so if you do have any candidates, we would love to talk to them. >> i don't have any candidates. but i think that what i am trying to say is this is a pilot program and we have not done it before and if you start setting up too many guidelines and rules you box yourself in where a little bit if you let out the general guidance and then we will have to see where the interest is and we can sort of help to guide it along and i don't disagree with brandon what the objective is and sometimes you start to strap yourself in too quickly and i think that we need to be flexible and i think that the word is flexible. >> they do have it in the proposal here that if a lbe member, or part of the group does or decides to get out of somewhere along the line, and maybe before the lease ends,

that lbe will be replaced by another lbe. >> correct. >> we want to preserve that space for those opportunities. >> because, in the past, like in the last, rfp, we had was for the old jelly space and it needs over a million dollars worth of work. and so that is a hurtle that a lot of our local small businesses can't take advantage of. ? so that is why because this was a turn key operation. we thought that it would be a good opportunity to open it up to the local smaller businesses. i would like to see it be the first of many. >> we have another one in mind, baby steps. >> i have one more comment and i have been involved with small business lending for a long time in my career and i think that everyone knows the success rate for small business regardless of the background is very, very difficult, and many, and so i just think that we, we need to say that we want a

small business, but i think some experience and technical assistance from a cbo is not going to save somebody who can't survive and i think that it is really important that we don't think that the cbo is going to help to step in and help that business survive, it just does not work, i mean that is not the way that small businesses work, and i think that it is important that the size of the business, and the background of the business and the financial for the viability of the business and experience is important to consider and don't say that we have a cbo that is going to hold the hand and help that business and then we will have something that has a problem and we will have to start all over again. >> commissioner adams? >> first of all i want to thank you for your due diligence and i appreciate the wisdom and the will of my fellow commissioners and i personally like the idea and there is also an option here that you get two bites at the apple and i understand what commissioner woo ho is saying, but i think that this is a good

idea and i think that, you know, if we can work at this and have some flexibility, but, at the end of the dai, ule of the commissioners will committed and so is the port to give someone an opportunity and to make sure that this succeeds, and as commissioner brandon says, that we would like to see more minorities and contractors have an opportunity and it is good that the big boys and the big girls always have an equal plan to fill but sometimes, the small girls and boys, they need a shot too. and so i think that this is a good start, we can look at it and learn from it and i think that this is something good and i appreciate the presentation and we can always tweak this thing and i think that this is a good start and you have my support, thank you. >> and i also wanted to thank you, susan and your team. and i think that this is a creative approach to some of the concerns that i think that all of us have expressed about making opportunities available, here at the port and this is i think, a wonderful way to reach out to our community members, and provide those opportunities.

and i think that you have heard some of the comments here, but i would assume that the selection panel will take a lot of those concerns, and issues, under advisement as they go through the process. and i would imagine that if they look at the businesses to select that they will pick those ones that will just need that little extra step to be strong and viable and have that support. but, i really again, appreciate what you have brought forward and i think that this can serve as a bit of a model for the other departments in the city as well. >> thank you. >> and we will come back with some more information, and work with the cbos as we develop the rfp and bring it back to you in april. >> thank you. >> thank you. >> okay. >> next. >> item 8 a,request authorization to amend foreign trade zone no. 3 zone schedule 1 (tariff) containing rules, regulations, rates and charges to conform to new foreign-trade zones board regulations. (resolution no. 14-11). >> good afternoon,

commissioners, commissioner and present katz and vice president adams and commissioners, my name is jim maloney and i want to give you a brief presentation on number three, and the zone schedule revision and ask that you approve the resolution in front of you. our zone schedule effectively our foreign trade zone tariffs which includes the rules, regulations, and definition and our rate schedule. the foreign strayed zone board which is an agency of the u.s. department of commerce, grants authority to local jurisdictions to operate the foreign trade zones in an effort to promote the business and economic development in the local regions. and as you are aware, the port received a grant of authority to operate foreign trades on number three, back in 1948. and this success and activity associated with the zone has ebbed and flowed over the years and when the zone, or when the port terminated the relationship with our existing operator back in 2009, who

operated the foreign trades zone appears on 19 and 23, the port took over the direct operation and management of the zone ourselves at that point. and without an operator, the port it as i mentioned took on the direct marketing of the zone and due to the port's renewed focus and efforts, the refinery, and was our second zone site, and they took effect december of 2011. and part of that, the chevron refinery was the only site that we had up to 2009, and we are also in the process of activating the expediters international foreign trade sight in brisban and should be activated any time and we are in the process of activating the phillips 66 in rodeo as the foreign trade sites, the port taking over the management on a

2009 coincided with the ftz board's introduction of the innovative alternative site framework program which i will refer to as asf which took a bricks and mortar program, generally requiring activity to take place at a port facility, and to turn it into a virtual program, and that is more, readily portable to businesses throughout a multi, county, asf area. in 2010, the port applied to reorganize the port trade zone and we also had the same time, de designated pier's 19 and 23 and our application for a service area covering san francisco and san mateo county was approved in october of 2010, in the response to the requests from the businesses and economic development and organizations in north bay counties, we further apply to ad morin salano and most of

sonoma and napa counties as well to the area and approved for this expansion by the foreign trade zone board in april of 2013. all along, port staff have been marketing the benefits of the trade program to organizations such as the san francisco chamber of commerce, china, sf. sfoairport, and the county, economic development association or sam seda and the silicon valley, alliance, the redwood city, chamber of commerce. the city of napa and the county of napa and the association, and the napa chamber of commerce, and sf made, a local manufacturer association, and also 101 mfg which is another manufacturer association that focuses on the highway 101 corridor and the counties.

and also, the salano economic development corporation as well as the governor's office of economic and business development, or go bis. we organized and held our own half day foreign trade zone seminar in june of 2012. and we also sponsored similar trade events that were hosted by the u.s. commercial service, and af made, and the northern california world trade center and the economic development board. there continues to be strong interest in the ftz programs throughout the area. in 2011, the 2011 trade zone board voted to overhaul the trade zone regulations has not been done 1991. the new regulations took effect in 2012 and further stream lined the program to make it relevant to the business in the 21st century. the new regulations required, each foreign trades zone to update and revise, the zone

schedules and forward those to the foreign trade zone board for on-line publication for february 28, 2014 which is late they are week. this provided ftz number three the opportunity to simplify and stream line our own zone schedule and we reduced our schedule from 31 to 17 pages, for instance, and really simplified the text and also required us to justify our fees which allow for the cost recovery and some vaguely refined return on investment. and we analyzed all possible costs involved in administering the foreign trade zone and estimated that to be 125 in 2013, and 55,000 were fixed time staff costs total ftz fees collected in 2013, were $50,000. the port expects to earn,

96,500 in fees during 2014, with the addition of the new expediters international and phillip's 66 refinery sites. and so, we believe that the ftz number three will be self-sustaining in 2014 and beyond. the regulations do require that we continue to monitor and justify our fees in future so we will utilize the cost methodology that we adopted to the current schedule review. the zone schedule revision also facilitated an opportunity to develop a sliding scale fee schedule that charges an annual fee based on the square footage of an ftz site. and we have proposed four different tiers, the lowest have a $10,000 annual fee and the highest a $20,000 annual fee. and this scaled approach conforms with the uniform treatment provision of the

regulations sense like sized zone sites will be treated equally, but makes it easier for small and medium sized firms to form access to the benefits. this tier's fee structure is in response to the comments that we received from the marketing from the market during our conversations with businesses and economic development associations, other ftzes in the u.s., utilize a similar tiered fee structure including a foreign trade zone, 84 which is operated by the port of houston authority as well as foreign trade zone 20 which is operated by the port of virginia. and annual fees for existing foreign trade zone sites will remain at the current levels under this plan. so there will not be any rejections in the existing fees. there is additional background information on the zone schedule revision and the staff report so that i will close my remarks here. and take any questions that you might have, thank you.

>> thank you. >> do you have a motion? >> so moved. >> second. >> okay. >> and any public comment. >> seeing none, commissioners? >> yeah, i have a couple of questions. and you mentioned that you will be collecting more than 96,000 verses the 50,000 and that is due to the increase of the two new zones and you do have cost recovery plus, the rate of return, and so, i am trying to understand in this and i know that it is not apples to apples because the past way and the structure will work verses what you are proposing, is the increase only due to the fact that we are adding more? adding more users on to it? or is it also because of there is a fee, increase, based on cost recovery? >> it is simply because we are adding additional sites at this point. >> so, that is all that it is and although you have gone

through the detailed cost recovery and secondly, you said that it allowed for a vague rate of return and so what have you assumed? and we need to look into this further and we are not making any physical investments in a port owned site at this point but i think that there might be opportunity to consider investment in like investing in marketing. and it is something that we need to look into further and investigate the regular you sleighsings that probably talked to the foreign trade zone board. >> the rate of return, not necessarily a hard asset is certainly, acceptable, and in this world. >> right. i think that is something that if you could come back and tell us what you think that should be some time in the future working with the finance folks and secondly. you mention that had this will be reviewed periodically and so who do the regs allow you in terms of looking at the schedule and how often do you have to public it to the public. and you take a look at this and you come back and have decided that we have got a rate of

return of x and do you have to go and get that approved? and then so two questions, do you have to get it approved? and secondly, do you, or often can you revise your schedule? >> so, the foreign trade zone board for the first time is going to be publishing all of the zone schedules throughout the country on their website and their foreign trade zone board website and and so that will be a first and we have had ours, published on the website for several years now. so, it is not clear how often we are supposed to review it. i think that we need to, i think say annually probably about the right amount and it does not specifically say in the rec you lacings, but, i think that what we will do is review it annually and probably also take at cost recover and i what other zones are charging as well to make sure that we are competitive. >> you have got to almost the

whole bay except for further south that sounds like and you are saying that san jose charges more. >> actually they charge a little bit less, $15,000 for a annual fee right now and oakland is charging $10,000. although they are in the process of reviewing their zone schedule. and so they may, we are not sure what they are going to do. >> i was comparing the $15,000 to the 10,000. >> the lower tier, we are $10,000. you are right. we are lower. >> has san jose been adding a lot of users? >> they have added a couple of users, they added tesla but they have got about, i think about five zone sites, but they are talking to other folks as well. we actually were talking to a site in vanesha that was looking to build electric cars that were the components were made in china and the ports

were coming through the port of oakland and going for assembly. and they were in and they were actually approved to become a site under our zone, and we were some what competing with oakland's foreign trade zone and unfortunately that company will be operating as a foreign trade zone except they went bankrupt you might be familiar with them. >> rye. >> and the amount of money that we are talking about is not huge but it seems to me that any time that you can recover any of the port's costs, and expenditure and if the program could expand, it is important why we keep the eye on even on the pennies and the dollars and cents that is the reason that i have asked the questions is to keep at it because it is like we need every dollar and penny that we can recoup. >> i would say that a lot of the auto macing and some of the work that we have already done is making our administrative processes more efficient, and for instance, we put together these operations, agreement and templates now, and that we can now utilize and it will be much

more easy to negotiate, in the future. and the zone schedule, and it is a one time, you know, big revision that we have done. and which, will make our lives easier in the future, but i think that the fact that we have this tiered structure that will help to facility the smaller and medium sized businesses to join the program, i think that will help us to get more and bring more sites in and get more revenue as well. >> as i counted up, we have five or six users right now. >> four, actually. >> we have the chevron, and phillips, 66. >> and we have expediter international and we have others in the pipeline that we are working with now and hope to bring them on board in the near future. >> so, if you might have 20, just think of what that means. >> that would be ideal. >> that is what you should aim for. >> absolutely. >> commissioner? >> yes, thank you.

>> and covered all of my questions. >> thank you, it is very comprehensive and i just want to note, too, that jim has offered his services to help some of the other trade zones as they try and improve their processes. so i want to thank you. >> i just got a call from the city of oakland and they are looking to submit their asf application and i think that the port of oakland is pushing them on that. >> thank you for extending a good will of the san francisco port. >> all right. >> thank you. >> commissioner? i am in favor, you know, and i appreciate the comments from commissioner woo ho. but just reading here, the zone schedule was last revised in december, 2011. 16th would be a fact so i think that it is good that we update it and continue to grow it. and i do agree that we have to watch our cents, but also this

is an opportunity for us to continue to establish the economic development in communities and that is what the port is all about. >> right. >> the more that we can bring on and it will be beneficial for the international training for our community and that is what we need to be and i am clearly in support of this, thank you. >> thank you. >> that is really how we are trying to position it and sell it as an economic development tool for the whole region. and it is an opportunity, not only to help the existing businesses get stronger and be more competitive but also to attract new businesses into our area that are looking for, locations where they want to. >> and i think that it is fortunate that we have got practically the whole northern area of the bay area that is actually coming through the port of san francisco and so i commend all of you for being able to achieve that. >> what kind of efforts are we taking to get the word out about the zone in terms of perspective members? >> well, i mentioned all of the organizations that we reached out to directly, and we